Sherwood made his first signing of the summer transfer window on Wednesday, snapping up defender Micah Richards on a free transfer after his Manchester City contract expired.
Now though, Sherwood will be looking to add more players to his squad, and The Mirror believe that winger Townsend is on his wish list.
The 23-year-old wide man endured an inconsistent season under Mauricio Pochettino at White Hart Lane, but continues to be a regular in the England international setup.
The Mirror believe that Sherwood is keen to work with Townsend again having managed him during the 2013/14 season, but also report that a deal with Spurs chairman Daniel Levy could be 'tough' considering that he rejected bids of £10m and £12m from QPR and Southampton respectively last summer.
Should Tottenham sell Townsend?
Pochettino has few options on the flanks as it is, with Erik Lamela still adjusting to life in English football, though Nacer Chadli enjoyed a productive campaign.
Townsend may be frustrating and wildly inconsistent, but he does possess pace that few in the Spurs squad can offer, whilst Pochettino's work with young players suggests that Townsend could yet develop under the Argentine.
It should take a huge offer to force Tottenham into a sale, with Townsend certainly still having a future in North London given Tottenham's lack of quality wingers.